Crawford v. Hawes

2013 Ohio 3173, 995 N.E.2d 966
Ohio Court of Appeals·Decided July 19, 2013·No. 25178, 25180·Published·Cited by 12 cases

Opinion

IN THE COURT OF APPEALS OF OHIO SECOND APPELLATE DISTRICT MONTGOMERY COUNTY

RYAN CRAWFORD :

: Appellate Case Nos. 25178 Plaintiff-Appellee/Cross-Appellant : Appellate Case Nos. 25180 :

v. : Trial Court Case No. 2008-CV-7261 :

ADRION HAWES, et al. : (Civil Appeal from : (Common Pleas Court)

Defendant-Appellant/Cross-Appellee :

:

...........

OPINION

Rendered on the 19th day of July, 2013.

...........

RYAN CRAWFORD, 729 West Grand Avenue, Apartment 313, Dayton, Ohio 45406 Plaintiff-Appellee/Cross-Appellant, pro se

MICHAEL C. THOMPSON, Atty. Reg. #0041420, Wright-Dunbar Business Village, 5 North Williams Street, Dayton, Ohio 45402-2843 Attorney for Defendant-Appellant/Cross-Appellees Adrion Hawes and Patricia Douglas

.............

FAIN, P.J.

{¶ 1} Plaintiff Ryan Crawford and defendants Adrion Hawes and Patricia Douglas appeal from a judgment awarding $5,809.37 to Crawford on his unjust enrichment claim and awarding $14,066.20 in compensation to the Receiver, Matthew C. Sorg. Hawes and Douglas contend that the trial court erred in awarding compensation to the Receiver without first holding a hearing and in finding them jointly and severally liable with Crawford for the payment of the Receiver’s compensation. Hawes and Douglas further contend that the trial court erred in finding that they were unjustly enriched. Crawford contends that the trial court erred in awarding compensation to the Receiver and only awarding Crawford $5,809.37 on his unjust enrichment claim.

{¶ 2} We conclude that the trial court did not abuse its discretion in holding Hawes, Douglas, and Crawford jointly and severally liable for payment of the Receiver’s compensation. However, we conclude that under the particular circumstances of this case, which include the fact that the trial court had ordered that there would be a hearing on the issue of the Receiver’s compensation after the issues made up by the pleadings had been tried, the trial court erred in failing to hold a hearing prior to awarding the compensation requested by the Receiver. We also conclude that the trial court did not err in its award of $5,809.37 to Crawford on his unjust enrichment claim. Accordingly, that part of the judgment of the trial court awarding compensation to the Receiver is Reversed; the judgment is Affirmed in all other respects; and this cause is Remanded for a hearing on the Receiver’s request for compensation.

I. Hawes and Crawford Enter into an Illegal Contract

{¶ 3} In late 2007, Hawes and Crawford began discussing the possibility of opening a bar together. They decided to name the bar “Leo’s II," in honor of another bar Crawford had operated named “Leo’s.” Although no written partnership agreement existed between them,

Hawes and Crawford apparently agreed to enter into a 50/50 agreement regarding ownership and operation of the bar. Because they both had felony convictions, Hawes and Crawford asked Hawes’s mother, Patricia Douglas, to apply for the liquor license and sign the lease for the commercial space where the bar was to be located.

{¶ 4} “Leo’s II" opened on June 1, 2008. In late June, Hawes and Crawford had an argument regarding inventory purchases for the bar, which resulted in a physical altercation. Hawes subsequently terminated Crawford’s employment and barred him from entering the bar.

II. Course of the Proceedings

{¶ 5} Crawford brought this action against Hawes and Douglas, setting forth claims for breach of fiduciary duty, fraud, conspiracy, breach of contract, promissory estoppel, unjust enrichment, and conversion. Crawford also requested that a receiver be appointed by the court to protect his interests in the bar. One day later, Crawford filed a motion to appoint a receiver pursuant to R.C. 2735.01 and Local Rule 2.29 of the Court of Common Pleas of Montgomery County. Hawes and Douglas filed an answer and counterclaims for trespass, assault, and conversion.

{¶ 6} The day before a scheduled receivership hearing, Hawes and Douglas moved to continue the hearing. The magistrate denied the motion, and the hearing went forward as scheduled. The magistrate sustained Crawford’s motion to appoint a receiver. Hawes and Douglas filed objections to the magistrate’s decision, which the trial court overruled.

{¶ 7} Hawes appealed from the trial court’s appointment of the receiver. He contended that the trial court abused its discretion when it overruled his motion to continue the receivership hearing and appointed a receiver to manage the affairs of the bar. We held that the trial court had not abused its discretion in overruling Hawes’s motion to continue the receivership hearing. Crawford v. Hawes, 2d Dist. Montgomery No. 23209, 2010-Ohio-952, ¶ 25-26. But we held that the trial court did abuse its discretion when it adopted the magistrate’s recommendation that a receiver be appointed to manage the affairs of the bar, because there was an absence of evidence of fraud or financial mismanagement on behalf of Hawes or Douglas. Id. at ¶ 66. We reversed the trial court’s order appointing a receiver and remanded the cause for further proceedings consistent with our opinion.

{¶ 8} After the remand, Hawes and Douglas moved to dismiss Crawford’s complaint.

The trial court sustained this motion in part and overruled it in part:

The case law makes it clear that courts have no tolerance for illegal contracts. “A party to an illegal contract cannot come into court of law and ask to have his illegal objects brought to fruition. The law, as it has been aptly epitomized, ‘leaves the parties where it finds them.’ Neither the hard and fast rules of a court of law nor the more flexible customs of a court of equity can be invoked for relief.”[] “A court will deny all relief to a suitor, however well founded his claim to equitable relief may otherwise be, if, in granting the relief, it would assist a party to an illegal contract or covenant.”[]

Here, Defendants correctly assert that Plaintiff admits that the “partnership” fraudulently used Defendant Douglas’ identity to obtain the liquor license and the building lease. Defendants argue, then, that Plaintiff is barred under the common law doctrine of ex turpi causa non oritur action from using an illegal or immoral act as the basis for initiating a cause of action. “When parties are in parti delicto the law refuses to aid either of them against the other, but leaves them where they have placed themselves by their own acts.”[]

In a strikingly factually similar case, Nahas v. George [156 Ohio St. 52 (1951)], the Supreme Court denied recovery to a party seeking to enforce an illegal agreement. In Nahas, the decedent’s estate tried to recover under an alleged oral agreement, and the Supreme Court said the contract was unlawful because Nahas (a convicted felon) attempted to become a partner in a liquor selling business without disclosing said fact to the Department of Liquor Control before securing its approval.[] The Supreme Court held that the oral agreement directly violated public policy and the Liquor Control Act, and was therefore illegal.[]

In the case before this Court, Plaintiff states that he and Defendant Hawes purposely obtained a liquor license and building lease through their artifice[] of Defendant Douglas’ applying for and securing the same. Clearly, the parties’ intent, based on the Complaint and Plaintiff’s March 25, 2010 admissions, was to defraud the Department of Liquor Control regarding the ownership and control of Leo’s II. The parties’ actions in this regard violated public policy and several sections of the Ohio Revised Code, including but not limited to: §4303.293, §4303.29, §4303.25, and §4303.292. Therefore, the alleged oral agreement for the partnership concerning Leo’s II was illegal, and this Court will not permit Plaintiff to go forward with his claim for breach of oral contract (Count 4) or breach of fiduciary duties arising from the alleged oral partnership agreement

(Count 1).

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Crawford v. Hawes, 2013 Ohio 3173, 995 N.E.2d 966 (Ohio Ct. App. 2013).

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